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INDIA is now integrating more with the rest of Asia and will play a major role in Asia’s growth, top officials of the International Monetary Fund ( IMF) said.

“ You have a very rapidly growing large economy in the South Asia region, and that is India, and India is now also integrating much more with the rest of Asia,” Kalpana Kochhar, IMF deputy director ( Asia Pacific), said.

“ For example, trade between China and India is growing rapidly. Of course, it mostly imports from China, but it has grown very rapidly in recent years. So, prospects for integration both in the South Asia region amongst them and with the rest of Asia, I think, have greatly improved and will continue to do so,” she said.

IMF director, Asia Pacific department, Anoop Singh said the fund expects Asia to continue leading the global recovery and grow by about seven per cent this year and next year.

“ As is now well- known, China and India will again lead Asia’s growth with growth rates of 10 and 8.8 per cent this year,” he said.

While the pattern of recovery has varied in Asia, as it has in other regions, Singh said it is important to note that both the more domestically oriented economies, such as China, India and Indonesia as well as the more export- oriented economies are experiencing strong upturns.

Singh said IMF expects output gaps to close this year in a number of economies, including South Asian countries, such as India.

“ By the end of 2009, output in most of Asia had returned to the pre- crisis levels even in those economies that were hit hardest by the crisis,” Singh said.

“ After the deepest recession in recent history globally, we know that Asia is leading this global recovery,” he said in a briefing on the region. “ In fact, activity in Asia has rebounded fairly swiftly over the past year and in the first quarter of 2010.” While the pattern of recovery has varied in Asia, “ both the more domestically oriented economies such as China, India and Indonesia as well as the more export- oriented economies are experiencing strong upturns,” Singh added.

Singh identified two factors as underpinning Asia’s strong performance. First, the global and domestic inventory cycles are boosting Asia’s industrial production and exports. Second, private domestic demand in the region is expected to remain robust even as macroeconomic policies begin to withdraw stimulus.

Asked if rising inflation in South Asia will pose a serious threat to the region’s recovery, Singh said it is not surprising that inflation has begun to turn up as output gaps in much of Asia have begun to narrow. “ We do expect output gaps to close this year in a number of economies including countries in South Asia, such as India,” he said noting there is a significant contribution to higher inflation coming from food and energy prices.